Surprise Medical Bills Did Not Go Away, They Moved to Employers
The law left patients out of the fight, but employers now face unpredictable costs, budget overruns, and pressure to accept high priced contracts.
Marketplace · Surprise, you've got medical bills!Congress did stop surprise hospital bills from landing on patients in 2020, but the bills did not go away. They moved to employers, which pay for much of American health insurance, through a private system for settling price fights.
The idea was simple. When a patient gets emergency care from a doctor who has no price agreement with the insurer, the patient is left out of the money argument. The doctor and the insurer are supposed to negotiate a reasonable price on their own.
If they cannot agree, they go to arbitration as a last resort. That means a private referee picks one side's price after hearing from both.
In practice, some large doctors groups go straight to arbitration because they usually win. Geronimo Wright, the numbers expert for the health plan covering nearly 35,000 people tied to Clark County, Nevada teachers, watched emergency care bills climb month after month. By summer 2024, he calculated that the fees the insurer charged just to handle those disputes equaled 7 percent of the plan's existing spending on emergency care.
Wright called one frequent arbitration user, the doctors group Team Health, and negotiated a direct contract within weeks. That means Team Health agreed to a set price with the plan so future cases avoid arbitration. Over one year, that deal cut about $500,000 in dispute-processing costs alone. Team Health holds a handful of other employer contracts like it and is pursuing 15 more.
Other employers have not found an easy exit. James Gelfand, who leads an industry group for employers that pay their own health costs, says some doctors groups offer direct contracts but at prices far above market rates, and many of his members have rejected them as irresponsible. The arbitration costs are also unpredictable, which makes budgeting hard. San Antonio has blown past its budget by $40 million tied to these disputes, while New York's coverage plan for state workers is lifting premiums by 10 percent, in part to cover them.
The original law included a benchmark price to guide arbitrators. Doctors challenged it as too low and a court set it aside. Now arbitrators pick the higher doctors' bid 85 percent of the time. Lindsay Murtagh, a Brown University researcher who wrote the arbitration rules, says a key fix is recentering that benchmark price. She worries more doctors groups will see the high win rate and flood the system in search of higher prices.
She also prioritizes clearing up conflicts of interest, a goal shared by at least one lawmaker. The worry raised in the reporting is that identical backers might be financing both the arbitration firms and the doctors groups that usually win.
Questions people ask
What was a surprise medical bill before the law?
A surprise bill usually happened in an emergency, when the hospital was covered by insurance but the doctor working there was not. The doctor could bill the patient for the full remaining amount, sometimes thousands of dollars, even though the patient had no choice of doctor.
How does this health care arbitration work?
Each side submits a price, and the referee must choose one, not split the difference. The loser also pays fees for the process, which is why repeated cases can add large extra costs even before the medical bill itself is paid.
Will workers feel these employer costs?
Probably, indirectly. Employers that pay their own health costs often respond to higher medical spending by raising worker premiums, deductibles, or contributions, or by holding down wages. New York's 10 percent premium increase for state workers is one visible example.